SYDNEY, Dec 4 Australia's central bank cut
interest rates a quarter point to a record-matching low on
Tuesday, stepping up efforts to safeguard the rich world's most
resilient economy from the risk of recession as a mining boom
peaks.

The Reserve Bank of Australia (RBA) cut its main cash rate
to 3.0 percent following its monthly policy meeting, bringing
the easing since May to 125 basis points and matching the trough
hit during the darkest days of the global financial crisis.

"While the full effects of earlier measures are yet to be
observed, the Board judged at today's meeting that a further
easing in the stance of monetary policy was appropriate now,"
said the central bank's governor, Glenn Stevens.

"Looking ahead, recent data confirm that the peak in
resource investment is approaching. As it does, there will be
more scope for some other areas of demand to strengthen."

Financial markets were almost fully priced for an easing
given signs the seven-year old bonanza in mining investment is
finally likely to crest next year, leaving a hole in growth that
needs to be plugged by other sectors of the economy.

The move was so well discounted the local dollar actually
firmed a quarter of a cent to $1.0445 on the news.

Yet, investors are still wagering official rates will have
to go lower yet to truly stimulate demand among cautious
consumers and a lacklustre housing market.

Interbank futures suggest the central bank rate
could approach 2.5 percent by the middle of next year, while
some economists think a floor of 2 percent is not impossible.

"I think the RBA realises it needs to do more to boost the
non-mining parts of the economy," said Shane Oliver, chief
economist at AMP Capital Investors in Sydney.

"What it doesn't do is to offer much guidance as to the
future, but my feeling is they still have to cut further. They
will probably do 25 (bps cut) in February and then 25 in April."

One reason for that is the stubborn strength of the
Australian dollar.

In the global financial crisis, the currency tumbled by 30
U.S. cents, giving a big boost to exports. This time foreign
demand for Australia's triple-A rated debt has helped it stay
solidly above parity.

China has also played a part by accepting more moderate
growth at home and thus restraining demand for Australia's
commodity exports, leading top miners such as Rio Tinto
and BHP Billiton to announce a slowdown
in future expansion plans and job cuts.

The Asian giant is Australia's biggest trade market and the
single largest buyer of iron ore.

It helped Australia avoid recession during the global crisis
by unveiling a 4 trillion yuan ($635 billion) stimulus package
that led to a wave of infrastructure development and demand for
resources.

Australia's mining investment in the year to June 2013 is
expected to total A$109 billion, or nearly 8 percent of GDP, way
above the long-run average of 2 percent.

CONSUMER CAUTION, FISCAL TIGHTENING

Even after Tuesday's cut, Australian rates are still among
the highest in the developed world.

With rates near zero in the United States, Japan and
Britain, those countries have taken ever more exotic stimulus
steps including buying massive amounts of government debt.

And, as yet, lower rates have had only a limited impact on
consumers, with retail sales disappointingly flat in October and
demand growth for credit the lowest in decades.

The housing market has also been less than stellar. The
Statistics Bureau on Tuesday reported approvals to build new
homes slid 7.6 percent in October, so reversing much of
September's hefty 9.5 percent increase.

The impact of lower export prices was clear in Australia's
trade deficit, which more than doubled in the third quarter. As
a result, the current account deficit widened by a fifth to
A$14.9 billion ($15.5 billion), according to figures from the
Australian Bureau of Statistics.

Fortunately, export volumes managed to outpace imports and
so add 0.1 percentage point to economic growth in the quarter.

However, that was more than offset by government
penny-pinching as the ruling Labor Party struggles to return the
budget to surplus in 2013, years before most other rich nations.

Data out Tuesday showed government spending fell by 2.0
percent in the third quarter, largely due to a big drop in
defence investment. That was a steeper fall than many analysts
had expected and could take around half a percentage point from
economic growth in the quarter.

It was no surprise then that Treasurer Wayne Swan warmly
welcomed the RBA's largesse.

"Today's rate cut is the early Christmas present that
hard-working Aussies deserve," he told reporters. "It comes at a
time where unemployment is low, and economic growth is in much
better shape than many other developed economies."

Figures for gross domestic product (GDP) are due on
Wednesday and were expected to show moderate growth of around
0.6 percent in Australia's A$1.4 trillion economy.

Such a result would see growth for the year slow to a
still-respectable 3.2 percent, from 3.7 percent. But the balance
of risks seems biased to the downside going into 2013.

Analysts estimate that fiscal tightening alone could shave
between 0.75 and 1.5 percentage points off GDP growth in the
year to end June 2013.

Dec 9 A former Cantor Fitzgerald trader has been
indicted on charges that he defrauded investors by lying about
the price of mortgage bond transactions he handled for them
after the financial crisis, U.S. prosecutors said on Friday.

Reuters is the news and media division of Thomson Reuters. Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Learn more about Thomson Reuters products: